A welcome decision
Tuesday, 21 August 2007
THE interim administration, according to a report published in this daily, has put off its decision to increase power and gas tariff and fuel oil prices in view of the deteriorating price situation and the devastation caused by monsoon flood. The administration has been in a dilemma for quite sometime over the issue of raising fuel oil prices and power and gas tariffs. But the onslaught of the flood has changed the situation, creating new grounds for the government to rethink about its earlier decision to effect such hikes at this moment that would have added to the miseries of the poor consumers.
The multilateral donors, particularly the International Monetary Fund (IMF), have reportedly being exerting pressure on the government for quite some time to increase fuel oil prices and power and gas tariffs. Business leaders in their two recent joint statements while opposing the government's rate-hike move had been very critical of the role of the IMF. Such criticism is nothing new as far as the IMF is concerned. It does also often come under attack even from the western media for its role as a global monetary watchdog. The reality is that standpoints of both sides on the related rate-hike issue are not illogical. For instance, the state-owned Bangladesh Petroleum Corporation (BPC) sells diesel and kerosene at prices lower than its procurement costs and in the process it has brought itself to near bankruptcy. To retrieve it from severe financial crisis, the government has been forced to make a special allocation of Tk. 7.35 billion in the national budget for the current financial year.
Similarly, the gas distribution and transmission companies have been incurring $1.0 loss for per unit of gas purchased from the international oil companies (IOCs). Then again, the Power Development Board sells per unit of electricity at a rate well below its generation cost. Any commercial or industrial entity, no matter who owns it, is not supposed to sell its products at rates lower than its procurement or production costs. The private businesses would never indulge in such a practice because this goes against the trading norms. However, inefficiency, mismanagement and gross irregularities have been largely responsible for the losses incurred by the state-owned entities, BPC and the power and gas entities included.
The businesses, it seems, have opposed the government move to raise gas and power tariffs and fuel oil prices particularly in the context of the soaring inflationary pressure on the economy. The concern of the business leaders is very genuine since the rate of inflation has now reached the highest level during last one and a half decades and the common men already have their back to the wall. The poor and middle income people are longing for a respite from the unbearable situation so far as prices of food items are concerned. Any increase in the prices of fuel oils or tariffs of gas and power would naturally leave an immediate adverse impact on the price level because of the consequent increase in the cost of production and transportation.
Under the circumstances, the government's decision to delay the hike in the prices of fuel oils and tariffs of power and gas is very timely and wise one. Such a decision would have created resentment of a serious nature among the consumers. None would like to see such resentment simmering among cross-sections of people particularly when there is a strong need for all concerned sustaining confidence among all related operators to keep the wheels of the economy moving with investments picking up for generating employment activities and accelerating the pace of growth momentum.
The multilateral donors, particularly the International Monetary Fund (IMF), have reportedly being exerting pressure on the government for quite some time to increase fuel oil prices and power and gas tariffs. Business leaders in their two recent joint statements while opposing the government's rate-hike move had been very critical of the role of the IMF. Such criticism is nothing new as far as the IMF is concerned. It does also often come under attack even from the western media for its role as a global monetary watchdog. The reality is that standpoints of both sides on the related rate-hike issue are not illogical. For instance, the state-owned Bangladesh Petroleum Corporation (BPC) sells diesel and kerosene at prices lower than its procurement costs and in the process it has brought itself to near bankruptcy. To retrieve it from severe financial crisis, the government has been forced to make a special allocation of Tk. 7.35 billion in the national budget for the current financial year.
Similarly, the gas distribution and transmission companies have been incurring $1.0 loss for per unit of gas purchased from the international oil companies (IOCs). Then again, the Power Development Board sells per unit of electricity at a rate well below its generation cost. Any commercial or industrial entity, no matter who owns it, is not supposed to sell its products at rates lower than its procurement or production costs. The private businesses would never indulge in such a practice because this goes against the trading norms. However, inefficiency, mismanagement and gross irregularities have been largely responsible for the losses incurred by the state-owned entities, BPC and the power and gas entities included.
The businesses, it seems, have opposed the government move to raise gas and power tariffs and fuel oil prices particularly in the context of the soaring inflationary pressure on the economy. The concern of the business leaders is very genuine since the rate of inflation has now reached the highest level during last one and a half decades and the common men already have their back to the wall. The poor and middle income people are longing for a respite from the unbearable situation so far as prices of food items are concerned. Any increase in the prices of fuel oils or tariffs of gas and power would naturally leave an immediate adverse impact on the price level because of the consequent increase in the cost of production and transportation.
Under the circumstances, the government's decision to delay the hike in the prices of fuel oils and tariffs of power and gas is very timely and wise one. Such a decision would have created resentment of a serious nature among the consumers. None would like to see such resentment simmering among cross-sections of people particularly when there is a strong need for all concerned sustaining confidence among all related operators to keep the wheels of the economy moving with investments picking up for generating employment activities and accelerating the pace of growth momentum.